WARSAW — Winona PVD Coatings, LLC’s request for Economic Development Revenue Bonds is moving one step closer to reality. Warsaw City Council approved two resolutions relating to the bonds Monday evening, Sept. 21.
The council’s action on the bonds followed a brief public hearing, which there were no comments heard for or against the resolutions.
The resolutions had received initial approval by the Warsaw Redevelopment Commission earlier in the month. With approval by the city council, the resolutions will now return to the redevelopment commission for final approval.
The bonds will not exceed $865,000, with $650,000 going towards the project and the remaining funds used for financing and debt services reserve funds for the bond issuance.
Jeremy Skinner, city planner, explained the economic development revenue bond is the reverse of a tax abatement. The economic development bonds are upfront money to the company and then paid back by the company, through taxes, over a 15 to 20 year time period. A tax abatement spreads the amount of money available to a company over a 10-20 year time period.
The company is adding 60,000 square feet onto its existing 100,000 square foot building, Skinner reported. Skinner stated the project will total $12 million, between the expansion in real estate and new equipment. This is the third expansion for the company in two years.
Scott M. Dahl, new chief executive officer, for Winona PVD Coatings, LLC., stated the expansion is urgent as the company is currently working three shifts, six days a week, sometimes seven days to produce 100,000 wheels a month to meet existing contracts. New contracts are on the way. He added the company is now looking to increase the building expansion to 80,000 square feet. The expansion will add one additional line, referred to as line 4, with approximately 40 additional jobs, with a second line, referred to as line 5, to quickly follow, with another 30-40 jobs.
“We want to invest here,” stated Dahl adding the company plans to “keep everything here. We don’t want to move away. We have an investment in Warsaw.”
Also present with Dahl was Jamie T. Visker, founder and board member and Fred Fribley, president.
Andrew Mouser with J.H. Umbaugh & Associates, Indianapolis, and Anne E. Fischesser with Faegre Baker Daniels, LLP, South Bend, were present to walk through the payment schedule and explain the resolutions.
Mouser stated the bonds will be similar to the 2013 and 2013A Winona PVD bonds, at an amount of not to exceeded $865,000 with an interest rate not to exceed 6 1/2 percent. The schedule he provided council members showed an amortization of the bond over the 15-year period, with the final payment taking place in 2030. He also noted the company will be responsible to make initial payments with the remainder coming from tax payments received.
Questions by the council included the effect it would have on the 2016 budget and the stoppage of sewer bond payments in 2022. Skinner stated there is money budgeted for 2016 to cover the project, however, the funds may need to be appropriated. Mouser stated the sewer bonds will be paid off in 2022. It was also noted the amortization did not include any future bonds which may be sold by the city.
“I am so happy you want to keep investing in our community,” stated Elaine Call, council member.
Call stated she felt the interest rate was high and questioned why it was such. Mouser stated the bonds will be taxable bonds, which often raise the rates. The figure was set to provide flexibility when the bonds are sold.